Verizon Wireless (NYSE: VZ) and T-Mobile US (NYSE:TMUS) forged a $173 million deal to transfer a slew of AWS-1 and PCS spectrum licenses between them in various markets across the country. The deal, which is expected to close in the fourth quarter, includes spectrum swaps in parts of Arkansas, California, Illinois, Indiana, Iowa, Kentucky, Massachusetts, Minnesota, Mississippi, Missouri, Montana, New York, North Dakota, Ohio, Pennsylvania, South Dakota, Tennessee and Virginia.
T-Mobile disclosed the deal and its value in a filing with the Securities and Exchange Commission last week. The spectrum swaps will not include any transfers of customers or other network gear.
"These assignments involve only the transfer of spectrum; no network or other assets or customers are involved," the companies said in a filing with the FCC outlining the public interest benefits of the deal -- a standard procedure. "The assignments are, in all markets, intra-market license exchanges that will enable more efficient operations resulting from larger blocks of contiguous spectrum and/or the alignment of spectrum blocks held in adjacent markets. All of these intra-market exchanges involve the exchange of an even amount of spectrum, where neither Party will increase its spectrum holdings in the market."
Verizon and T-Mobile agreed to assign PCS and AWS spectrum to each other within the same market areas, which will allow them "to enjoy the efficiency benefits associated with larger blocks of contiguous spectrum and/or alignment of spectrum held in adjacent markets."
"Aligning the spectrum blocks held in adjacent market areas allows the carriers to operate more efficiently by facilitating handoffs when users transition to the adjacent markets," the companies noted. "Spectrum alignment also reduces coordination burdens associated with operations at the edge of market boundaries, because the licensee can then operate on the same frequency block in adjacent markets. Thus, Commission approval of these applications will enhance competition and improve the quality of services in the wireless marketplace."
After (and before) close, T-Mobile will hold (and had held) between 15 and 102 MHz of spectrum in the counties where spectrum is being assigned to T-Mobile, and Verizon and its subsidiaries will hold (and had held) between 72 and 167 MHz of spectrum in the counties where spectrum is being assigned to the Verizon licensees, the companies said.
The largest markets where Verizon will get spectrum if the deal is approved are Memphis, Tenn.; and St. Louis, where Verizon will get 10 MHz of PCS spectrum. The transfers are notable because Verizon has started refarming some of its PCS spectrum for LTE service in markets across the country.
Many of the other spectrum transfers and swaps include smaller cities and towns outside of major cities, like Yuba City, Calif., outside of San Francisco and Sacramento. However, the swaps will increase the amount of contiguous spectrum blocks the carriers have, which could make it easier for them to refarm the spectrum for added coverage and capacity, especially as more carriers refarm PCS airwaves for LTE.
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